Today we take a brief look at a couple of interesting employment law cases from the last two weeks: Anderson v London Fire and Emergency Planning Authority shows us how not to draft a pay review clause, and HM Land Registry v McGlue looks at when aggravated damages in discrimination cases might be appropriate.
Beware of unclear pay clauses
The case of Anderson v London Fire and Emergency Planning Authority acts as a stark warning for employers when drafting contractual pay clauses, particularly when providing for alternate scenarios.
In this case, the unions had agreed a three-year pay deal with the Fire Authority, which was set out in a collective agreement. The provisions gave two options for an increase in the third year, but did not state which of those options would take precedence, stating only that:
“pay will be increased by 2.5% or by the NJC for Local Government Services settlement plus any uplift required to ensure general pay increases for the period 2007-09 are 1% above the NJC settlements for the same period."
The Court of Appeal (“CA”) held that this was clearly a term which was meant to be incorporated into employment contracts (the existence of the choice didn’t preclude this).
More significantly, it interpreted the clause by effectively inserting the words “whichever is the greater”. The CA considered that this was the clear intention of the parties and that no other interpretation would make any industrial sense – the unions would not have agreed to an unfettered choice by the employer, and the employer would have known this. The employer’s argument that it could choose which option to rely on was therefore rejected.
Employers should be careful, therefore, to ensure that there is no ambiguity in employment contracts or collective agreements. In the case of dispute, courts will look hard at the parties’ intentions. Clear and careful drafting is therefore essential to avoid such disputes arising, especially for provisions regarding pay increases.
Aggravated damages for discrimination
In HM Land Registry v McGlue, the EAT overturned the Tribunal’s decision to award £5000 aggravated damages to the Claimant, making clear that there is a high hurdle to reach before such damages will be appropriate in successful discrimination cases.
The purpose of aggravated damages in discrimination cases is to compensate the claimant for any additional mental distress they have suffered due to the way in which the employer carried out the discrimination. It is separate to an injury to feelings award.
This case provides guidance as to when such damages will be appropriate, making clear that conduct which is carried out in an “exceptionally upsetting” way (e.g. “in a high-handed, malicious, insulting or oppressive way”) may attract aggravated damages, as may conduct which is based on unacceptable motives such as prejudice, animosity, spite or vindictiveness. Similarly, an employer’s subsequent conduct (for example where a case is conducted at a trial in an unnecessarily offensive manner) may be sufficient to justify the award of aggravated damages. Otherwise, though, such aggravated damages are unlikely to appropriate, even in cases where the employer’s behaviour merits a relatively high injury to feelings award (£12,000 in this case).